Serbia’s central bank increased its policy rate by 25 basis points to 6 per cent, citing the risk of energy costs spreading to other prices. The decision also lifted deposit and lending facility rates. The bank expects inflation to move above its target band next year before returning within it at year-end. Its next meeting is on 10 December.
The National Bank of Serbia raised its policy rate to 6 per cent at its 12 November meeting. The increase was 25 basis points, or a quarter of a percentage point. The bank also lifted its deposit facility rate to 4.75 per cent and its lending facility rate to 7.25 per cent.[1], [2]
The central bank said the tightening was intended to limit energy-related cost increases spreading into other prices. Annual consumer inflation stood at 4.1 per cent in September, and petroleum products cost more than 17 per cent above a year earlier. The bank said fuel excise-duty cuts had softened the increase passed to consumers.[1]
The inflation target remains 3 per cent, with a tolerance band around it. The bank projects inflation above that range next year before a return within it at year-end. It expects current-year economic growth of at least 3.5 per cent and lowered its following-year forecast to 4 per cent. The next rate meeting is scheduled for 10 December.[1]
For borrowers, the effect of the rate decision depends on their contracts. Fixed-rate loan payments remain unchanged over the agreed fixed-rate period; the central bank’s policy rate is distinct from the interbank benchmark used for euro loans.[2]
